|
Advanced Search Options
Income Tax - Case Laws
Showing 341 to 360 of 9304 Records
-
2022 (12) TMI 877
Deduction u/s 40b - disallowance on account of interest paid to partners and on account of salary paid to partners - "admissible amount" - HELD THAT:- The certificate of C.A. is also placed on record at PBP 34 who conducted the Audit u/s 44AB of the Act alongwith computation of total income. Thus from these documents, it becomes clear that no addition could have been made by the AO.
Revenue Authorities rejected the rectification application in a mechanical manner without going into the facts of the case. The Bench has also perused the CBDT Circular No. 14 (XL 35) of 1955 dated 11-04-1955 which is relevant in the present case as it has been categorically mentioned in that Circular that taxpayer should be guided by the AO to file the correct return and to allow him to the deductions which he is entitled under the Income Tax Act, 1961.
In the instant case, instead of allowing the ‘’admissible amount’’, the AO on the contrary disallowed the amount without any justification and without looking into the reality of the facts of the case as the assesee was legally entitled for deduction. The Bench finds that Hon’ble Supreme Court in number of cases has held that real income should be assessed which in the Bench view has not been done in this case.
Therefore, considering the totality of the facts and circumstances of the case, the Bench feels that the assessee is entitled to deduction u/s 40b of the Act and thus the AO is directed to delete the addition which has been made while relying upon the amount wrongly mentioned by the assessee in the column of ‘’inadmissible’’. Thus the appeal of the assessee is allowed.
-
2022 (12) TMI 876
Short Credit for TDS - Whether TDS credit to be given in the year under consideration based on the evidence in the form of ITR filed by the ld. AR of the assessee claiming that the same is already disclosed in the ITR-6 filed ? - HELD THAT:- DR fairly accepting the contention of the assessee not objected to the factual aspects of the case. Based on these arguments supported by the evidences which was fairly accepted by the revenue we are of the considered view that since the law is clear on the issue as to allow the carry forward of the credit TDS in subsequent year and the credit for TDS is required to be matched with the income declared by the assessee. Since the ld. AR demonstrated us that the assessee has followed the applicable method permitted under the law and therefore, he has not objected to the propositions of ld. DR to get this factual aspect be verified by the jurisdictional AO. Based on these set of facts and arguments advanced before us we are of the considered view that the credit for prepared taxes carry forward for A.Y 2017-18 as claimed by the assessee in A.Y 2081-19 is required to be allowed subject to verification of the amount carry forward with that of the income offered in the year under consideration.
Addition of the sales promotion expenses - Allowable business expenses u/s 37(1) - HELD THAT:- It is not disputed by both the parties that the assessee is engaged in the business of Business Support Services. Therefore, the expenditure is required to be incurred by the assessee as per instructions of the client. We have also gone through the orders of the lower authorities and details submitted by the assessee. The contentions as raised by the Revenue are factual and based on the inadequate details filed by the assessee and revenue argued that why the missing details is required which the assessee has not submitted to the satisfaction of the assessing officer and therefore, we are of the considered view that the Assessing Officer was not in a position to verify various aspect on account of the on account of non-submission of the various details by the assessee called for by the ld. AO. All these details will facilitate the ld. AO to decided so as to allowability of the claim of the assessee as per provision of section 37(1) of the Act.
In the light of these observations, we set aside this issue and the ld. AO is directed to verify all these aspects as raised by the Revenue and at the same time, the assessee is directed to submit all the details that has been called for by the Revenue so as to decide on the expenses claimed in accordance with the law. With these observations, the solitary ground raised by the Revenue is allowed.
-
2022 (12) TMI 875
Disallowance of rent paid to M/s. DRS Industries Ltd - question of assessee making payment to land owner towards rent - HELD THAT:- The undisputed facts are that the agreement between the assessee and M/s. DRS Industries Ltd did not materialize and consequently, the dealership of Skoda cars sales & services has not been transferred to the assessee.
Rent agreement in respect of premises where the business was carried out by M/s. DRS Industries Ltd., was also in the name of M/s. DRS Industries Ltd., and the land lord. Therefore, the question of assessee making rent payment directly to land owner does not arise. It is not case of the assessee that it has paid rent to M/s. DRS Industries Ltd., in pursuance of an agreement and in turn M/s. DRS Industries Ltd., has paid rent to land lord. In absence of any agreement between the appellant and land lord, the AO has rightly disallowed rent expenses debited into the profit and loss account. CIT(A), after considering relevant facts has rightly sustained additions made by the AO and thus, we are inclined to uphold the findings of the ld. CIT(A) and reject grounds taken by the assessee.
Disallowance of advertisement expenses paid - AO has disallowed advertisement expenses incurred by the assessee, on the ground that there is no valid agreement between the assessee and M/s. DRS Industries Ltd., for incurring advertisement expenses - HELD THAT:- We find that there is no valid agreement between the appellant and M/s. DRS Industries Ltd., and further the so called agreement is not acted upon, and as claimed by the assessee for various reasons, the dealership of Skoda cars sales & services has not been transferred in the name of the assessee. Therefore, the assessee is running a dealership business and incurring of advertisement expenses does not arise. CIT(A) after considering relevant facts has rightly sustained net advertisement expenditure debited into the profit and loss account and thus, we are inclined to uphold the findings of the Ld. CIT(A) and reject the grounds taken by the assessee.
-
2022 (12) TMI 874
Correct head of income - Addition on account of income from house property or business income - As argued assessee has granted the lease and earns rent income and thus the same cannot be treated as income from business - assessee is engaged in the business of construction and only profit on sale of constructed unit are shown as business income whereas unsold units which are shown as stock in trade forms the part of business of the assessee - HELD THAT:- It is pertinent to note that the assessee has shown closing stock and received building use permission in respect of the same. As undisputed fact that the assessee is engaged in the business of construction and only profit on sale of constructed unit are shown as business income whereas unsold units which are shown as stock in trade forms the part of business of the assessee.
CIT(A) has rightly held that since the assessee was a developer and held the unit in questions income from such unit can be taxed as only business income and not as income from house property. It is pertinent to note there is no concept of deemed rent while computing business income and the CIT(A) has rightly deleted the addition.
In the case of Ansal Housing Finance and Leasing Co. Ltd. [2012 (11) TMI 323 - DELHI HIGH COURT] will not be applicable in the present case as the assessee has already treated the said unsold unit as stock in trade. The decision of Hon’ble Gujarat High Court in the case of CIT vs. Neha Builders [2006 (8) TMI 105 - GUJARAT HIGH COURT] in fact is applicable in the present case as the issues herein are identical to the present case. If property is used as stock in trade then such property would become or partake the character of stock and any income from stock would be income from business and not income from property. CIT(A) was right in deleting the addition. Appeal of the Revenue is dismissed.
-
2022 (12) TMI 873
Disallowance u/s 14A r.w.r. 8D - determination of expenditure incurred in relation to exempt income - HELD THAT:- Hon’ble Apex Court in the case of Godrej & Boyce Manufacturing Co. Ltd. [2017 (5) TMI 403 - SUPREME COURT] held that subsections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the AO is not satisfied with the claim of the assessee.
Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the AO, what the law postulates is the requirement of a satisfaction in the AO that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable.
The said principle has been reiterated in the case of Marg Limited [2020 (10) TMI 102 - MADRAS HIGH COURT] - Further in Maxopp Investment Limited [2018 (3) TMI 805 - SUPREME COURT] observed that it is that expenditure alone which has been incurred in relation to the income which is not includible in total income, is to be disallowed. If expenditure has no casual connection with the exempt income, such expenditure would be an allowable expenditure.
Applying the ratio of aforesaid principles as well as the consistent view of Tribunal in assessee’s own case as cited before us, we would hold that since AO has mechanically applied the provisions of Rule 8D while making the aforesaid disallowance without establishing any nexus of expenditure claimed by the assessee with that of exempt income earned during the year, such disallowance is not sustainable in law. Accordingly, Ld. AO is directed to delete the additional disallowance while computing income under normal provisions as well as while computing Book profits u/s 115JB.
-
2022 (12) TMI 872
Exemption u/s 11 - application of registration made by the appellant u/s 12A rejected - In the books of account nothing is shown to have spent on charity by the Trust which is also evident from Income & Expenditure accounts - HELD THAT:- Income and expenditure account indicates free medical camps, treating the patient at concessional rates being organised by the assessee. We further find that the photographs along with the bills and vouchers produced before the learned CIT(E) of the Act have not been properly considered by the learned CIT(E). Further, the return filed with Charity Commissioner has also not been doubted by the learned CIT(E) of the Act.
Thus we are of the considered view that the details filed by the assessee have not been properly examined by the learned CIT(E) of the Act while denying the registration to the assessee under section 12AA of the Act. Therefore, we deem it appropriate to set aside the impugned order and direct the learned CIT(E) to de novo adjudicate upon the application for registration filed by the assessee under section 12A - Appeal by the assessee is allowed for statistical purposes.
-
2022 (12) TMI 871
Additions towards difference between guideline value of the property and sale consideration u/s. 50C - difference between stated consideration for sale of property and guideline value fixed for payment of stamp duty - arguments of the assessee is that as per 3rd proviso to section 50C(1) of the Act, inserted by the Financial Act, 2018 w.e.f. 01.04.2019, if difference between stated consideration and guideline value does not exceed 10% of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall be deemed to be the full value of consideration - HELD THAT:- Although said amendment came into statue by Finance Act, 2018 w.e.f. 01.04.2019, but the co-ordinate bench of the Tribunal in the case of Amrapalli Cinema [2021 (4) TMI 1160 - ITAT DELHI] held that amendment made in scheme of section 50C(1), by inserting third proviso thereto and by enhancing tolerance band for variations between stated sale consideration vis-à-vis stamp duty valuation from 5% to 10% are effective from date on which section 50C, itself was introduced in the statue.
A series of Tribunal decisions have reiterated said legal position and held that amendment in section 50C(1) is curative in nature and must be held to relate back to the date of introduction of section 50C i.e., 01.04.2003 onwards. The ITAT, Chennai benches in the case of Doraisamy Suresh, (HUF) [2022 (4) TMI 743 - ITAT CHENNAI] had also considered an identical issue and held that if difference between stated consideration and guideline value is less than 10% as prescribed under 3rd proviso to section 50C(1), then there cannot be any addition by substituting full value of consideration.
In this case, there is no dispute with regard to the fact that difference between stated consideration and guideline value of the property is less than 10% and thus, we are of the considered view that there is no error in the reasons given by the CIT(A) to delete additions made towards difference between consideration received for sale of property and guideline value of the property and thus, we are inclined to uphold the findings of the Ld. CIT(A) and dismiss the appeal filed by the revenue.
-
2022 (12) TMI 870
Deduction u/s.80P - Savings and Fixed Deposits with Co-operative Bank - whether the assessee is eligible for deduction u/s 80P(2)(d) where the deposits were made in the co-operative banks? - assessee contends that the co-operative bank is akin to that of the co-operative society which is registered under the Co-operative Society’s Act or under any other law for the time being enforce - HELD THAT:- The assessee has relied on the decision of co-ordinate bench in the case of Kaliandas Udyog Bhavan Premises Cooperative Soceity [2018 (4) TMI 1678 - ITAT MUMBAI] which has considered the decision of the Totgars Co-operative Sales Society Ltd. [2017 (7) TMI 1049 - KARNATAKA HIGH COURT] and also the decision of State Bank of India [2016 (7) TMI 516 - GUJARAT HIGH COURT] wherein it was observed that the interest income earned by a cooperative society on its investments held with a co- operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.
The assessee’s case is similar to the above mentioned decision of the co-ordinate bench which has distinguished the facts with the decision of Totagars Co-operative Sales Society (supra) case. For the foregoing reasons, we are of the view that the ld. CIT(A) was not justified in confirming the action of the A.O.
From the above observation and by respectfully following the above said decision, we are inclined to allow the appeal filed by the assessee which is on identical facts as that of the above cited decision. Appeal filed by the assessee is allowed.
-
2022 (12) TMI 869
Revision u/s 263 by CIT - deduction of interest income has been claimed u/s. 80(P)(2)(d) - As per CIT cooperative bank is not cooperative society for claiming of deduction u/s 80P(2)(d) - interest on FDR received from Sikar Kendriya Sahakari Bank Limited has been claimed and the same was allowed by the AO, which is not allowable u/s.80(P)(2)(d) and PCIT found that it is factually apparent that the AO has not verified the issue while completing the assessment - HELD THAT:- As the A.O while framing the assessment had taken a possible view, and revenue did not demonstrate the error remain on the part of the ld. AO. In fact, when the ld. AO has conducted the required enquiry and not violated any of the conditions mentioned for revision of order as required by Explanation 2of Section 263 order passed by the AO could not be deemed to be erroneous so as to be prejudicial to the interests of the revenue.
As long as the action of the AO cannot be said to be lacking bonafides, his action in accepting an explanation of the assessee cannot be faulted merely because it could have been lawful to make mere detailed inquiries or because he did not write specific reasons of accepting the explanation.
As for learned PCIT's observations regarding accepting the explanation "without appropriate evidence", there is nothing to question the bonfides of the Assessing Officer or to elaborate as to what should have been 'appropriate' evidence. The fact remains that the specific issue raised, in the revision order was specifically looked into, detailed submissions were made and these submissions were duly accepted by the Assessing Officer. Merely because the AO did not write specific reasons for accepting the explanation of the assessee cannot be reason enough to invoke powers under section 263, and non-mentioning of these reasons do not render the assessment order "erroneous and prejudicial to the interest of the revenue". Appeal of the assessee is allowed.
-
2022 (12) TMI 868
Disallowances of bogus trading loss in penny stock as well as commission expenses - whether the script Regency Trust Ltd is penny stock and appearing in the investigation report carried out by Kolkata investigation wing? - HELD THAT:- The trading loss generated by the assessee cannot be held as bogus only on the basis of the modus operandi, generalisation, and preponderance of human probabilities. In order to hold, the income earned or loss incurred by the assessee as bogus, specific evidence has to be brought on record by the Revenue to prove that the assessee was involved in the collusion with the entry operator/ stock brokers for such an arrangements. In absence of such finding, it is not justifiable to link the fact or the finding unearthed in case of some third party or parties with the transactions carried out by the assessee. The case laws relied by the AO are with regard to the test of human probabilities which may be of greater impact but the same cannot used blindly without disposing off the evidence forwarded by the assessee. In simple words, there were not brought any evidence from independent enquiry to corroborate the allegation.
Whether a person who genuinely involved in the trading of scrip of certain company and in the process incurred loss can be disallowed under provision of the Act in a situation where it is established that the share price of the company was rigged up to extend the benefit to certain parties? - Justice cannot be delivered in a mechanical manner. In other words, what we see on the records available before me, sometime we have to travel beyond it after ignoring the same. Furthermore, while delivering the justice, we have to ensure in this process that culprits should only be punished and no innocent should be castigated. An innocent person should not suffer for the wrongdoings of the other parties. In the case on hand, admittedly there was no evidence available on record suggesting that the assessee or his broker was involved in the rigging up of the price of the script of Regency Trust Ltd. Thus, it appears that the assessee acted in the given facts and circumstances in good-faith.
Respectfully following the judgment of Smt. Krishna Devi [2021 (1) TMI 1008 - DELHI HIGH COURT] hold that the trading loss incurred by the assessee cannot be held bogus merely on the basis of some modus operandi unearthed in case of third party/parties unless some cogent materials are brought against particular assessee on record. Therefore, no reason to disturb the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the grounds of Revenue’s appeal are dismissed.
-
2022 (12) TMI 867
Exemption u/s 11 and 12 - Appellant is a separate and independent entity which is not registered u/s 10(23C) (iiiad) - HELD THAT:- AR before us vehemently pleaded that up to AY 2014-15, it is a fact that assessee had erroneously treated itself as an independent entity and filed its returns. However, the assessee would still be entitled for exemption u/s 10(23C) (iiiab) and not u/s 10(23C)(iiiad) of the Act as the assessee is an educational institution wholly and substantially financed by Government.
This is a fresh claim made by the assessee before us.
Considering all we deem it fit and appropriate to remand this entire appeal to the file of the ld.AO for denovo adjudication in accordance with law. All the arguments of the assessee could be made before ld.AO in the set aside proceedings. The assessee is at liberty to furnish fresh evidences, if any, in support of all its exempts. Needless to mention that the assessee be given reasonable opportunity of being heard. AO is hereby directed to frame fresh assessment for the year under consideration in accordance with law by considering the aforesaid observations and the evidences filed by the assessee on record. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
-
2022 (12) TMI 866
Disallowance made by the CPC in an intimation issued u/s. 143(1) denying the exemption claimed u/s. 11 - Assessee plea as entitled for exemption u/s. 10(23C)(vi) as per the deemed approval - CIT-A dismissed the appeal of the assessee by observing that as there is no order granting approval u/s. 10(23C)(vi) i.e. produced by the assessee from the competent authority, the appeal filed by assessee against the CPC intimation dated 04/02/2019 was rejected - HELD THAT:- In the mechanism of application of Section 143(1) for the relevant assessment year, we find that, the first proviso to Section 143 (1) mandates that “no adjustments” except for arithmetical mistakes and/or an incorrect claim that is apparent from any information in the return. The scope of permissible adjustments under section 143(1)(a) for the relevant year is much narrower.
Hon’ble Bombay High Court in case of Khatau Junkar Ltd. v. K.S. Pathania [1992 (2) TMI 67 - BOMBAY HIGH COURT] has observed that, where a claim has been made which requires further inquiry, it cannot be disallowed without hearing the parties and/or giving the party an opportunity to submit proof in support of its claim. In the absence of section 143(1)(a) being read in the above manner i.e. debatable issues cannot be adjusted by way of intimation under section 143(1)(a), would lead to arbitrary and unreasonable intimations being issued, leading to chaos.
In the instant case we also note that no opportunity was granted to the assessee to put forth its stand before disallowing the deduction claimed. The issue in the present appeal is debatable and therefore the revenue was not right on their part to unilaterally proceed by disallowing the claim.
In the interest of justice, we remand this issue back to Ld.AO to grant opportunity of being heard to assessee in a physical hearing and to consider the claim in accordance with law.
-
2022 (12) TMI 865
TP Adjustment - rejecting the audited segmental accounts furnished by the Assessee by arbitrary allocating operating specific expenses on the basis of revenue earned by the assessee in each segment which were originally allocatd by the assessee on sound allocation keys - Whether AO/Ld. TPO erred in considering the margin of the assessee in contract manufacturing segment as 1.79% as against the actual margin of 7.70%? - HELD THAT:- As there was no specific finding by Ld. DRP on this issue. Hence, in the interest of justice, it is appropriate to remit this issue to the file of Ld. DRP to give specific direction on the above issue raised by the assessee before Ld. DRP as well as before us.
Inclusion and exclusion of certain comparables - HELD THAT:- We remit this issue to the file of Ld. DRP to specify the specific comparables which are to be included or excluded before the lower authorities. The lower authorities has to decide the issue afresh giving opportunity of hearing to the assessee.
Corrected margins of comparable companies submitted by the Appellant - HELD THAT:- We have remitted the issue relating to the rejection of segmental financials and selection of comparables to the file of Ld. DRP for fresh consideration. This issue is also remitted to Ld. DRP to consider the correct margin of the comparables.
Disallowance of expenditure towards Corporate Social Responsibility (“CSR”) u/s 80G - HELD THAT:- After hearing both the parties, we are of the opinion that the claim of the assessee has to be examined by the Ld. DRP on production of the requisite details by the assessee. DRP also directed to consider the order of the Tribunal in the case of First America (India) Pvt. Ltd. [2020 (5) TMI 187 - ITAT BANGALORE] wherein held that “assessee cannot be denied benefit of claim of deduction under Chapter VIA of the Act in relation to payments, which form part of CSR expenses since that would lead to double disallowance, which is not the intention of legislature.” Accordingly, this issue is remitted to the file of Ld. DRP for fresh consideration.
Expenditure incurred on Voluntary Retirement Scheme - HELD THAT:- The assessee has not furnished the full details other than name of the person to whom the payment has been made in accordance with Voluntary Retirement Scheme and not produced the terms and conditions of this scheme and documentary evidence. Hence, the claim of the assessee is rejected. In view of the above findings, we remit this issue to the file of Ld. DRP with the direction to the assessee to produce necessary details as sought by the Ld. DRP.
Disallowance u/s 14A - HELD THAT:- If there is no exempted income, there cannot be any disallowance u/s 14A read with Rule 8D of the I.T. Rules. Accordingly, we remit this issue to the file of Ld. DRP to examine the file of financials of the assessee and if there is no exempted income, there cannot be any disallowance u/s 14A read with Rule 8D of the I.T. Rules or if there is no exempted income, there cannot be any disallowance.
Disallowance in respect of Indian Accounting Standard adjustment of preference shares - HELD THAT:- The assessee has made claim on this count in revised return. The Ld. DRP has directed the AO to verify the validity of revised return so claimed to have been filed by the assessee and consider the same if the revised return is valid return as per the provisions of the Act for computing total income of the assessee. In our opinion, appellate authority could entertain the claim of assessee, even though no revised return is filed. Hence, we direct the Ld. DRP to examine this issue afresh.
-
2022 (12) TMI 864
Taxability of revenue from sale of software - DRP/AO held that receipt earned by the Appellant outside India from sale of Microsoft Retail Software Products to distributors belonging to India is taxable under the Act/ DTAA - HELD THAT:- As in assessee’s own case for AY 2012-13 [2022 (5) TMI 246 - ITAT DELHI] the issue has culminated in favour of assessee conclusion based on the principles of law that sale of software products does not give rise to royalty income as laid down by the Hon’ble Delhi High Court in Infrasoft Ltd. case [2013 (11) TMI 1382 - DELHI HIGH COURT] which have now further been affirmed in the case of Engineering Analysis Centre of Excellence P. Ltd. [2021 (3) TMI 138 - SUPREME COURT]
Royalty receipts - subscription to cloud base service - whether income from cloud services cannot be taxed as ‘royalty’ in the hands of distributor? - HELD THAT:- As cloud base services do not involve any transfer of rights to the customers in any process. The grant of right to install and use the software included with the subscription does not include providing any copy of the said software to the customer. The assessee’s cloud base services are though based on patents / copyright but the subscriber does not get any right of reproduction. The services are provided online via data centre located outside India. The Cloud services merely facilitate the flow of user data from the front end users through internet to the provider’s system and back. The ld. AO has fallen in error in interpreting it as licensing of the right to use the above Cloud Computing Infrastructure and Software (para 10.5 of the Ld. AO order). Thus the subscription fee is not royalty but merely a consideration for online access of the cloud computing services for process and storage of data or run the applications.
While dealing with similar question in regard to the case of M/s. Salesforce.com Singapore Pte. [2022 (4) TMI 327 - ITAT DELHI] where the said assessee was provider of comprehensive customer relationship management servicing to its customer by using Cloud Computing Services / Web Casting Services held that all the equipments and machines relating to the service provided by the assessee are under its control and are outside India and the subscribers do not have any physical access to the equipment providing system service which means that the subscribers are only using the services provided by the assessee.
Chennai Tribunal in the case of ACIT v Vishwak Solutions Pvt. Ltd. [2015 (4) TMI 794 - ITAT CHENNAI] has upheld the findings of CIT(A) that “the amount paid to the non-resident is towards hiring of storage space.” The aforesaid squarely covers the controversy in regard to the present assessee also. In the light aforesaid, the Bench is of considered view that the ld. Tax Authorities below had fallen in error in considering the subscription received towards Cloud Services to be royalty income.
No distinction on facts or law could be pointed by Ld. DR. Therefore, following aforesaid findings in favor of the assessee these grounds are determined in favour of the assessee.
-
2022 (12) TMI 863
Long term capital gain - allowable expenditure u/s. 48(i) for the purpose of computing the taxable component of long term capital gain - interest payment on security deposit towards clearance of encumbrance with Ramaniyam and payment of compensation to SAE & BJT for vacating the land and obtaining its peaceful possession for the purpose of completing the sale transaction - HELD THAT:- As conclusions flowing from the explanations and evidences furnished by the assessee in the present case are leading us to consider the doctrine of ‘preponderance of human probabilities’ and the ‘surrounding circumstances’ in respect of the claims made. Instead of adopting superficial approach, claim of the assessee is to be examined in the light of real life probabilities which have been so done by the ld. AO. In respect of impugned land on which computation of long term capital gain is the subject matter of this appeal, on one hand it has been said to be used under lease arrangement for the business operations of two concerns (SAE and BJT) wherein the co-owners including assessee have substantive holding/controlling interest and on the other hand the same land is said to be developed under a JDA with one party Ramanaiyam.
The same land has been sold in the year under consideration giving rise to long term capital gains to the three co-owners who have attempted to minimize their taxability on the said gains by resorting to the two arrangements relating to the impugned land with SAE & BJT and Ramanaiyam, respectively. Claims by the assessee under the arrangements made tantamount to diversion of sale proceeds to which we do not ascribe our views favorably considering the facts and circumstances of the case as discussed above.
Thus we set aside the order of ld. CIT(A) and uphold the disallowance made by the ld. AO in respect of claim of deduction made by the assessee towards payment of compensation to SAE and BJT and to Ramanaiyam towards interest for clearance of encumbrance.Appeal of the revenue is allowed.
-
2022 (12) TMI 862
TP Adjustment - segmental profitability consideration for benchmarking analysis - preparations of segmental accounting were not accepted by the DRP - HELD THAT:- The segmental accounting prepared cannot be rejected without pointing out defects in the allocation done by the assessee. Moreover, it is also noted that accounts are duly audited. There is also no rule that if segmental accounts are certified by CA. the AO should stop application of mind and follow it as a gospel truth.
Hence, we are of the opinion that the segmental accounting prepared by assessee should be accepted and the consequence shall accordingly follow. Hence, to be fair to the parties, we are remitting the issue to the file of Assessing Officer once again to review the segment account prepared by the assessee and unless he can rebut the same with cogent reasoning, he shall accept the same. Assessee’s appeal is allowed for statistical purposes.
-
2022 (12) TMI 861
TP Adjustment - comparable selection - selection of comparables for benchmarking the international transaction pertaining to “Provision of Investment Advisory Services" - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list.
Transfer pricing adjustment - international transaction of “Payment of Interest on Fully Convertible Debentures (FCDs)" - HELD THAT:- As there is no change in facts and the methodology adopted by the assessee for benchmarking the international transaction of “Payment of Interest on FCDs‟ has been accepted in the prior years, we see no reason to deviate from the view so taken by the coordinate bench of Tribunal in assessee‟s own case cited supra. Further, the learned DR could not show us any reason to deviate from the aforesaid order. Thus, respectfully following the order passed by the coordinate bench of Tribunal in assessee‟s own case cited supra, we uphold the plea of the assessee and delete the impugned adjustment in respect of international transaction of “Payment of Interest on FCDs‟. Accordingly, grounds No. 1 and 2 aised in assessee's appeal are allowed.
-
2022 (12) TMI 860
TP Adjustment - MAM selection - Selection of CPM or TNMM as MAM - HELD THAT:- Undisputedly the assessee has maintained cost records CAS-4 which were duly certified by the CA in respect of direct and indirect cost and the gross profit margin is also available. Therefore the CPM has to be the most appropriate method which is inconsonance the provisions of Section 92B read with Rule 10B(1), 10C(1) & (2) as the eligible unit is a contract manufacturer and procuring semi-finished goods from Faridabad unit besides doing contractual job for the said non eligible unit.
We also note that assessee’s net profit as a whole of 19.99% during the year which is better and much higher than other comparables namely M/s Bharat Gears Ltd. 12.29%, M/s JMT Auto Ltd. 18.68% and M/s Hi-Tech Gears Ltd. 17.84%. Therefore considering these facts which show the net margin of the assessee being better than the comparable industries, we are of the view that price as determined by the assessee is at ALP.
No merit of the submissions of the ld DR that the assessee is not a contract manufacturer which are incorrect observations on the part of the TPO/AO.
Argument of the ld DR that the assessee itself followed TNMM method as mentioned in Form 3CEB, we observe the same was a mistake as the assessee in the TPSR mentioned CPM as MAM correctly and also placed the documents justifying and corroborating the fact that the assessee has followed CPM for benchmarking the domestic transactions between eligible unit and non-eligible unit. We also observe that OECD guidelines, UNTP manual & ICAI guidance Note also refer to CPM to be applicable where the semi-finished goods are transferred & job work is done. Appeal of revenue dismissed.
Additional depreciation u/s 32(1)(iia) - assessee had made some additions to fixed asset in the latter half of F.Y. 2012-13 and consequently the assets were put to use for less than 180 days - additional depreciation has been denied by the AO on the ground that there was no provision in the Statute granting additional depreciation to the assessee which has not been allowed in the preceding assessment year in which the conditions were made on the ground that the provision of Section 32(1)(iia) provides that the assessee is entitled to claim depreciation @ 50% of the of the normal rates as prescribed under clause (iia) and the said benefit has been specially granted w.e.f. 1.4.2016 by Finance Act,2015 from AY 2016-17 - HELD THAT:- The issue has been decided by the coordinate bench in M/s Birla corporation Ltd. [2014 (12) TMI 436 - ITAT KOLKATA] by holding that assessee is entitled to remaining 50% of the depreciation in the subsequent year where the said depreciation could not be claimed in preceding assessment year because of the reason that the asset was put to use for less than 180 days in terms of provision of Section 32(1)(ii).
Foreign currency loss - Claim denied by the AO on the ground that being notional and contingent in nature - alternative argument of the ld Counsel for the assessee that the assessee is entitled to depreciation on this amount of loss after it is capitalized in asset cost - HELD THAT:- As perused Section 43A which begins with non-obstante clause and provides that where assessee has acquired any asset during the previous year from outside the country for the purpose of business or profession and in consequence of forex fluctuations in the rate of exchange after acquisition of asset there is an increase or reduction in the liability of the assessee as expressed in Indian currency as compared to the liability existing at the time of making payment towards the whole or a part of the cost of the asset or towards the repayment of the whole or a part of the moneys borrowed by the assessee from any person, directly or indirectly in any foreign currency specifically for the purpose of acquiring asset along with interest if any, the amount by which the liability as aforesaid is so increased or reduced during previous year and which is taken into account at the time of making the payment irrespective of the method of accounting adopted by the assessee shall be added to or deducted from the actual cost of the asset. Therefore the arguments of assessee can not be accepted on this issue. In view of this we are not in agreement with the conclusion drawn by the ld CIT(A) on this issue and are inclined to reverse the appellate order by restoring the order of AO.
We find force in the alternative argument of assessee that the assessee is entitled to depreciation on this amount of loss after it is capitalized in asset cost. Accordingly the AO is directed to allow depreciation on this amount at the applicable rate of depreciation after capitalizing the loss. The ground no. 6 raised by the revenue is partly with the above observations.
-
2022 (12) TMI 858
Addition u/s 68 - unexplained credit - sale of penny stock company - bogus Long-Term Capital Gain - ITAT deleted the addition - HELD THAT:- Revenue has mentioned in the present appeal that the issue involved is covered by the judgment of this Court in Suman Poddar [2019 (9) TMI 1089 - DELHI HIGH COURT] wherein appeal of the Assessee was dismissed taking judicial notice of the fact that there was an astronomical increase in the share price of a company which was not commensurate with the financial parameters of the said company, yet this Court finds that a Coordinate Bench of this Court in PCIT vs. Smt. Krishna Devi [2021 (1) TMI 1008 - DELHI HIGH COURT] & connected ITAs has upheld the ITAT order which is impugned in the present appeal.
ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order - no substantial question of law arises.
-
2022 (12) TMI 850
Maintainability of appeal before Supreme court on low tax effect - tax effect to prefer an appeal before Supreme Court - HELD THAT:- As respective parties that tax effect in both the appeals for the relevant Assessment Years - 1995-96 and 1996-97 would be less than Rs. 2 Crores which is the monetary limit to prefer an appeal before this Court, as per Circular F.No.390/Misc/115/2017-IC dated 22.08.2019 issued by the Central Board of Indirect Taxes & Customs.
In that view of the matter and on the ground of low tax effect only, the present Appeals stand disposed of.
............
|
9911796707
